Hybrid RIA &Partners caps equity at 40 million shares in bid to reach $120 billion

More than 80 advisory teams have joined &Partners since former Wells Fargo CEO David Kowach launched the hybrid RIA in August 2023 with an equity-focused compensation structure. The firm is capping equity distribution as part of its five-year plan to recruit advisors.

“The equity cap is at 40 million shares. We have remaining undistributed equity that can support our growth up to approximately $120 billion in AUM. After that, we would recruit with cash,” an &Partners spokesperson wrote to InvestmentNews.

Executives from &Partners confirmed in a June 13 interview with InvestmentNews that the firm manages around $35 billion in client assets, with plans to reach $40 to $50 billion by the end of this year and the $120 billion mark by 2028. Founder John Alexander said &Partners expects to hit about $400 million in pro forma revenue by the end of 2025.

“When we complete our five-year plan and we've recruited the advisors we run to recruit, advisors will be the single largest group of shareholders within our firm,” said Kristi Mitchem, who founded &Partners alongside fellow ex-Wells Fargo senior executives Kowach and Alexander. There are 13 other founding partners in &Partners, according to an investor presentation.

Mitchem, Alexander and Kowach collectively own less than 15% of &Partners, with about “one-third of equity owned by friends and family and the rest split roughly half and half between home office employees and advisors,” said the &Partners spokesperson. No individual holds more than a 5% equity stake in &Partners, according to WealthManagement.com. 

“As an advisor when you join us, you get a significant piece of equity of the firm, and we made a decision that we were going to cap the amount of equity that we were going to issue. So there's a scarcity factor that comes into play too,” said Alexander.

&Partners launched in 2023 with the intent to hire 100 partnered advisor teams. Advisors added thus far largely came from Wells Fargo, Edward Jones, UBS, and Merrill Lynch. About $40 million in funding was raised to launch &Partners in 2023, and the firm says it has no plans for further raises at this time. 

Among the advisors showing interest in &Partners include some teams from Commonwealth, the independent broker dealer acquired by LPL Financial for $2.7 billion in March. 

“We're certainly aware of Commonwealth, we've had a lot of folks reach out to us from there. I also know that a lot of the recruiters are heavily involved, but we're not involved with those recruiters,” said Alexander. “To the extent that you have folks from Commonwealth who are used to a smaller, more collegial and maybe more nimble place, I think we appeal to them and we have had a lot of them reach out.”

Alexander added &Partners' advisors are seeing “no fee compression from the people joining us from wherever they may be coming from.” The standard industry advisor fee has 1% of a client’s assets under management, but a recent study from Cerulli Associates found that  83% of financial advisors expect to charge less than 1% by 2026 for clients with more than $5 million.

“We're big users of ETFs and SMAs, we only use triple clean share classes, we don't charge for in house investment management, and we don't charge for in house asset allocation,” said Mitchem. “So it is almost invariably the case that when an advisor moves from wherever they are today to &Partners, it represents a pretty significant cost savings for their clients, and we hope an uptick in quality.”